Credit Access as Key to Unlocking India's Dairy Industry Potential

Milky Mist, a major dairy processing company based in Erode, Tamil Nadu, operates a modern facility capable of processing milk from up to 70,000 farmers. However, the company currently sources milk from only around 2,000 farmers. This significant gap indicates a structural challenge in India's dairy sector.

The primary barrier to scaling milk production is the limited access to affordable and reliable credit for small dairy farmers. Without adequate financial support, these farmers struggle to invest in essential resources such as better cattle, quality feed, and veterinary care. As a result, even though there is a demand for milk and processing facilities are ready, the supply remains constrained.

Milky Mist's annual revenues exceed ₹2,500 crore, illustrating the economic potential of the dairy industry. However, the employment opportunities that could arise from increased production are not being fully realized. Each additional farmer in the supply chain can create jobs in areas such as transport, feed supply, animal health services, and rural logistics.

The case of Milky Mist aligns with the broader goals of India's White Revolution 2.0, which seeks to enhance dairy production. The existing infrastructure and market demand highlight the necessity for policy interventions focused on improving credit access and cooperative financing for farmers.

Policy recommendations include simplifying lending processes and strengthening institutional lending to support farmers' growth, which could, in turn, boost employment across the dairy value chain. Without these measures, even the most efficient dairy processing plants will remain underutilized.